Why Apply For A Merchant Cash Advance?

If your small business needs funding, it's nothing to be ashamed of. Maybe you need extra help before your grand opening. Maybe an expansion project has cost more than expected and you need it completed fast. Or maybe you have found yourself in a real bind and need to pay employees or purchase additional inventory. These are common problems that affect business owners all over the country.

Usually when a business needs cash, a small business loan from the local bank is thought of as the easiest solution. But small business loan applications take time; a few weeks (or longer) to be processed. And depending on your personal credit or the condition of the local economy, your request for capital may very well be denied.

That's why you should consider an effective alternative lending option: the Merchant Cash Advance.

Merchant Cash Advance. Alternative lending. Quick access to capital. Maybe you're thinking, “Rip off. Scam. Ticket to disaster!”

Not so fast! Before you write off an MCA as a viable source of funding, make sure you understand exactly what it is, and how it compares with standard business loans.

What is a Merchant Cash Advance?

By definition, an MCA is a lump-sum payment to you in exchange for a small percentage of your business' future daily credit card income.

When a company gives you an MCA, they are essentially paying you in advance for a small percent of your daily credit card transactions that will be remitted (or pulled) directly from your transaction totals. Once the total amount of the Cash Advance has been fulfilled, daily remittances from your card transactions will end.

Download an infographic for a simple explanation of how a cash advance works.

What are the benefits to a Merchant Cash Advance?

When compared to a small business loan or other standard lending option, there are several distinct benefits.

It's Quick: If you need your additional funding fast, a Merchant Cash Advance can usually be processed in about a week.

It's Reliable: Since the financial crisis, banks have been unwilling to offer even small loans to established businesses. Merchant Cash Advance providers have been formed with the backing of venture capital firms to specifically fill this need. As long as you have a record of credit card processing, you are much more likely to get approved for the cash you need.

It's Flexible: Your MCA's approval is based primarily on your business performance. Not on your credit score. If you have bad credit, it doesn't matter! Your business may still be able to receive a large MCA.

It's Hassle-Free: A Merchant Cash Advance does not need to be “paid back” by a certain time. You never have to write checks or worry about late payments. And because a small, fixed percent of your credit card transactions are pulled to fulfill the MCA, whether business is booming, or you're in the middle of the slow season, you can be funded and continue to run your business without the worry of “defaulting” or your cash flow running dry.

So what do you think of Merchant Cash Advances now?

If you have found yourself in the need for quick funding, and a bank has previously denied a loan request or has not approved what you need, a Merchant Cash Advance may be a great option for you.

If you are thinking about alternative funding options like an MCA, please feel free to contact us and discuss your business needs. One of our business consultants will be happy to assist you in your search for the appropriate method of funding.